Loma Negra Reports 3Q24 Results

(*) Net of shares repurchased

Table 1b: Financial Highlights in Ps and in U.S. dollars (figures exclude the impact of IAS 29)

Sales Volumes

Table 2: Sales Volumes²

² Sales volumes include inter-segment sales

Sales volumes of Cement, masonry, and lime during 3Q24 decreased YoY by 17.1% to 1.4 million tons, although showing a significant sequential recovery of 32%, outperforming the industry's recovery. Bagged cement is demonstrating stronger recovery, with only a single-digit decline year-over-year, while bulk cement dispatches continue to lag, as larger construction projects typically require more time for planning and execution once favorable economic conditions began to show up Similarly, public works continue to show low levels of activity, while the national government and provinces explore new frameworks to redefine public infrastructure investment.

Regarding of the volume of the Concrete segment, there was a decrease of 22.2% year-over-year. Segment volumes followed the trend of bulk cement dispatches, showing a slower recovery, even though the sequential comparison showed a solid improvement of 28%. The incidence of the public sector is still very low, while national and provincial governments are discussing future steps. Similarly, volumes for the Aggregates segment declined 28.7% year-over-year.

The Railway segment experienced a contraction of 7.0% compared to the same quarter of 2023. The lower transported volume of construction materials was almost fully offset by an improvement in grains, chemicals and fracsand.

Review of Financial Results

Table 3: Condensed Interim Consolidated Statements of Profit or Loss and Other Comprehensive Income
(amounts expressed in millions of pesos, unless otherwise noted)

Net Revenues

Net revenue decreased 21.2% to Ps. 180,686 million in 3Q24, from Ps. 229,223 million in the comparable quarter last year, mainly due to a lower top line performance of the Cement business, followed by the rest of the segments.

The Cement, masonry cement, and lime segment was down 21.0% YoY, with volumes contracting by 17.1%. Bagged cement dispatches are showing a quicker recovery, while bulk cement has been more affected by the economic environment, the standstill in public works, and lower activity levels in larger private projects. This effect is compounded by a softer pricing dynamic. With monthly inflation rates decreasing to low single digits, price increases are now more spaced out over time, allowing a more stable business environment.

Concrete registered a decrease in its revenue of 29.7% compared to 3Q23. This was mainly due to lower volumes, which decreased by 22.2% coupled with lower price dynamic. Similarly, the Aggregates segment posted a decrease in revenue of 42.4%, with sales volumes dropping 28.7% coupled with a more competitive scenario that affected price dynamics.

Railroad revenues showed a more moderate decrease of 4.7% in 3Q24 compared to the same quarter of 2023, as the lower transported volume, which decreased only 7.0% in the quarter, was partially offset with a positive price dynamic.

Cost of sales, and Gross profit

Cost of sales decreased by 20.5% YoY, reaching Ps. 139,911 million in 3Q24 compared to the same period of 2023, mainly due to the decrease in sales volumes across all segments, a lower impact of depreciations, and improved energy inputs. Regarding the cost of sales for cement, margins tend to tighten during this time of year due to seasonally higher energy inputs. Although this effect was mitigated by halting production in many of our kilns during the period and utilizing clinker stock, higher thermal and electrical energy costs impacted costs on a sequential basis. On the other hand, the significant improvement in sales volumes contributed to better absorption of fixed costs, offsetting the previously mentioned effect. In terms of electrical energy, the reduced energy requirements due to a longer halt in the limestone grinding phase of cement production increased the share of renewable energy in our energy matrix to 66%, up from 39% in 3Q23, contributing to lower energy costs. Additionally, freight costs and quarry exploitation fees also showed significant reductions compared to the third quarter of 2023.

Gross Profit decreased 23.5% YoY to Ps. 40,774 million in 3Q24, from Ps. 53,306 million in 3Q23, with a gross profit margin contraction of 69 basis points YoY to 22.6%.

Selling and Administrative Expenses

Selling and administrative expenses (SG&A) decreased 12.9% to Ps. 16,569 million in 3Q24, from Ps. 19,027 million in 3Q23. This was mainly due to lower salaries and a decrease in turnover tax and freight costs related to lower volume. As a percentage of sales, SG&A reached 9.2%, up 87 basis points year-over-year, mainly due to the lower top line.

Adjusted EBITDA & Margin

Table 4: Adjusted EBITDA Reconciliation & Margin
(amounts expressed in millions of pesos, unless otherwise noted)

Adjusted EBITDA decreased 18.5% YoY in the third quarter of 2024 to Ps. 43,279 million from Ps. 53,113 million in the same period of the previous year, mainly due to lower adjusted EBITDA generated by our cement business, partially offset by better performances in the Railroad and Concrete segments.

On the other hand, the Adjusted EBITDA margin expanded 78 basis points to 24.0% compared to 23.2% in 3Q23, despite the volumes drop and with a positive contribution of the Railroad and Concrete segments.

In particular, the Adjusted EBITDA margin of the Cement, Masonry and Lime segment contracted 20 bps to 25.5%. Tight cost controls and lower energy inputs partially offset the impact of reduced top line.

Concrete Adjusted EBITDA margin expanded 355 bps, and stood at 4.2%, from 0.6% in 3Q23. This improvement was supported by cost control measures and gains from the sale of obsolete assets, which offset the lower top line.

The Adjusted EBITDA margin of Aggregates contracted to negative 17.0%, from 4.8% in 3Q23. The low level of activity and a complex competitive environment took a toll on segment's profitability.

Finally, the Adjusted EBITDA margin of the Railroad segment improved 840 bps to 12.6% in the third quarter, from 4.2% in 3Q23. Transported volumes showed a moderate decline, primarily due to increased grain transport. Prices demonstrated solid growth, that coupled with an effective cost control supported the positive results.

Finance Costs-Net

Table 5: Finance Gain (Cost), net
(amounts expressed in millions of pesos, unless otherwise noted)

During 3Q24, the Company reported a total Net Financial Gain of Ps. 12,599 million compared to a total net financial cost of Ps. 4,884 million in 3Q23, primarily due to a lower impact of the exchange rate differences due to a decrease of the devaluation pace, a lower net financial expense mainly due to lower interest rates and a lower debt position. This effects were partially compensated by a lower gain on net monetary position due to a lower passive monetary position during the quarter and a softer effect of inflation adjustments.

Net Profit and Net Profit Attributable to Owners of the Company

Net Profit of Ps. 21.2 billion in 3Q24 compared to a net profit of Ps. 23.2 billion in the same period of the previous year. The lower operational result, mainly due to the drop in volumes, was partially compensated with a higher total financial gain. On the financial side, the lower impact of the devaluation and the lower net financial expense was partially deflected by a lower gain on the net monetary position due to the lower inflation dynamic. This gain was partially offset by higher income tax expenses.

Net Profit Attributable to Owners of the Company stood at Ps. 20.9 billion. During the quarter, the Company reported a gain per common share of Ps. 35.8696 and an ADR gain of Ps. 179.3479, compared to a gain per common share of Ps. 39.1868 and a gain per ADR of Ps. 195.9340 in 3Q23.

Capitalization

Table 6: Capitalization and Debt Ratio
(amounts expressed in millions of pesos, unless otherwise noted)

As of September 30, 2024, total Cash, Cash Equivalents, and Investments were Ps. 13,718 million compared with Ps. 64,610 million as of September 30, 2024. Total debt at the close of the quarter stood at Ps. 185,606 million, composed by Ps. 50,381 million in short-term borrowings, including the current portion of long-term borrowings (or 27% of total borrowings), and Ps. 135,225 million in long-term borrowings (or 73% of total borrowings).

At the close of the third quarter of 2024, 77% (or Ps. 143,272 million) of Loma Negra's total debt was denominated in U.S. dollars, and 23% (or Ps. 42,334 million) was in Pesos.

As of September 30, 2024, 14% of the Company's consolidated loans accrued interest at a variable rate, primarily based on BADLAR, as it is debt in pesos. The remaining 86% accrues interest at a fixed rate.

By the end of the quarter, the average duration of Loma Negra's total debt was 1.0 years.

The Net Debt to Adjusted EBITDA (LTM) ratio stood at 1.03x as of September 30, 2024, down from 1.40x as of December 31, 2023. During the quarter, the company addressed the maturity of its Class 1 bond (issued in pesos) and reduced its debt by US$40 million sequentially. The company's debt maturity profile remains very manageable, with no bond maturities until the fourth quarter of 2025.

Cash Flows

Table 7: Condensed Interim Consolidated Statement of Cash Flows
(amounts expressed in millions of pesos, unless otherwise noted)

In 3Q24, the cash generated in operating activities stood at Ps. 63,570 million, compared to a cash generation of Ps. 45,154 million in the same period of the previous year, mainly due to the positive effect of the working capital. During the quarter, clinker production was minimized to reduce energy inputs, resulting in lower inventory levels. This effect was accompanied by reduced accounts receivable and decreased income tax payments. In 3Q24, the Company used cash in financing activities totaling Ps. 34,767 million, primarily for the repayment of borrowings (net of proceeds) and interest payments. Regarding cash used in investing activities, the Company spent a total of Ps. 17,629 million, primarily on maintenance capex and the 25-kilogram bags project.

Adjusted EBITDA is calculated as net profit plus financial interest, net plus income tax expense plus depreciation and amortization plus exchange rate differences plus other financial expenses, net plus tax on debits and credits to bank accounts, plus share of loss of associates, plus net Impairment of Property, plant and equipment, and less income from discontinued operation. Loma Negra believes that excluding tax on debits and credits to bank accounts from its calculation of Adjusted EBITDA is a better measure of operating performance when compared to other international players.

Net Debt is calculated as borrowings less cash, cash equivalents and short-term investments.

About Loma Negra

Founded in 1926, Loma Negra is the leading cement company in Argentina, producing and distributing cement, masonry cement, aggregates, concrete and lime, products primarily used in private and public construction. Loma Negra is a vertically-integrated cement and concrete company, with nationwide operations, supported by vast limestone reserves, strategically located plants, top-of-mind brands and established distribution channels. Loma Negra is listed both on BYMA and on NYSE in the U.S., where it trades under the symbol "LOMA". One ADS represents five (5) common shares. For more information, visit www.lomanegra.com.

Note

The Company presented some figures converted from Pesos to U.S. dollars for comparison purposes. The exchange rate used to convert Pesos to U.S. dollars was the reference exchange rate (Communication "A" 3500) reported by the Central Bank for U.S. dollars. The information presented in U.S. dollars is for the convenience of the reader only. Certain figures included in this report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be arithmetic aggregations of the figures presented in previous quarters.

Rounding: We have made rounding adjustments to reach some of the figures included in this annual report. As a result, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

Disclaimer

This release contains forward-looking statements within the meaning of federal securities law that are subject to risks and uncertainties. These statements are only predictions based upon our current expectations and projections about possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "potential," "seek," "forecast," or the negative of these terms or other similar expressions. The forward-looking statements are based on the information currently available to us. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including, among others things: changes in general economic, political, governmental and business conditions globally and in Argentina, changes in inflation rates, fluctuations in the exchange rate of the peso, the level of construction generally, changes in cement demand and prices, changes in raw material and energy prices, changes in business strategy and various other factors. You should not rely upon forward-looking statements as predictions of future events. Although we believe in good faith that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Any or all of Loma Negra's forward-looking statements in this release may turn out to be wrong. You should consider these forward-looking statements in light of other factors discussed under the heading "Risk Factors" in the prospectus filed with the Securities and Exchange Commission on October 31, 2017 in connection with Loma Negra's initial public offering. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in our expectations.

IR Contacts

Marcos I. Gradin, Chief Financial Officer and Investor Relations
Diego M. Jalón, Investor Relations Manager
+54-11-4319-3050
[email protected]

Table 8: Condensed Interim Consolidated Statements of Financial Position
(amounts expressed in millions of pesos, unless otherwise noted)

Table 9: Condensed Interim Consolidated Statements of Profit or Loss and Other Comprehensive Income (unaudited)
(amounts expressed in millions of pesos, unless otherwise noted)

Table 10: Condensed Interim Consolidated Statement of Cash Flows
(amounts expressed in millions of pesos, unless otherwise noted)